]]>Wed, 04 Apr 2012 23:19:21 GMThttp://www.columbiapacificlaw.com/bankruptcy-blog/7-things-not-to-do-before-filing-bankruptcy While Bankruptcy often is a way for people to eliminate debts and start fresh, filing Bankruptcy is not something to be taken lightly. It is a serious legal proceeding involving the federal court system, and needs to be treated with respect and honesty.

Let's start with what NOT to do. These mistakes can cost you dearly, and in some cases are illegal. Some mistakes can keep you from receiving a discharge of your debts in bankruptcy, and in the worst case, could result in fraud charges being brought against you.

1. First and foremost, it is imperative that you are always completely honest and open with your bankruptcy attorney. Your attorney is ethically bound to assist you. You are also protected by the attorney-client privilege. As such, it is important that your attorney has all the information available to help you. It is important that you answer all questions completely, even if the questions (or answers) are embarrassing or make you uncomfortable. Your attorney is not there to judge you. We are there to get you the help you need.

In our experience, it is very likely that the one thing that most concerns you will not be a problem, as long as the attorney is aware of the facts from the beginning.

2. Don't hide under a rock hoping it will go away. It will not, and failure to answer lawsuits and garnishments filed against you will not help you. If you have dug yourself into a financial hole, the first thing to remember is to stop digging! Seek help from a bankruptcy attorney at the earliest possible opportunity to ensure that you are protected as much as possible.

3. Do not continue using your credit, especially for large purchases. No new accounts, no balance transfers, no misuse of existing accounts. Using credit when you know that you will not be able to repay the loans is considered fraud and can cause you more problems than it will solve.

4. Do not pay off credit card accounts. This is like throwing money away. These debts will be cleared away in most cases, and paying them off will not allow you to keep the accounts open. In most cases, your bank will know that you have filed and will close your accounts no matter what you do. Further, the amounts you pay immediately before filing will often be retrieved by the trustee and paid out to all your other creditors.

5. Do not try to transfer money or property to friends, family members, family trusts, LLC's or anyone else before filing bankruptcy. This could be considered fraud, and is easily repealed by the bankruptcy trustee.

6. Don't touch your retirement accounts. Using retirement money to pay down debt is a bad idea, especially if you are contemplating bankruptcy. Money in retirement accounts, including 401(k)s and IRAs is usually exempt, and therefore can usually be protected from creditors.

7. Do not pay off debts to friends and family members. This will not keep them out of the bankruptcy process. The trustee can go back even further to get money back form so-called "insiders. If the trustee wants to get back sums paid to family, he will sue them for it. This will cost your family even more in the long run, and will cause them even more headaches than they would otherwise endure.

]]>Fri, 23 Mar 2012 20:48:56 GMThttp://www.columbiapacificlaw.com/bankruptcy-blog/bankruptcy-the-end-or-a-new-beginning-famous-people-who-have-filed-bankruptcyEven as we hear stories about how the economy is improving, more and more people are still falling behind on mortgage payments, car payments, and credit payments as well as other types of debt. The economic problems facing the country left in their wake a huge backlog of problems, and many people have no reasonable hope of ever digging their way out. Many of these same people are becoming stressed out and depressed, perhaps even causing or contributing to health problems all of which just make the problems worse.

Many of these people are wondering about bankruptcy. Would filing bankruptcy help them get the fresh start they need? Or would it ruin them forever? Have you been thinking that if you must file bankruptcy it brands you as a failure and terminates your financial future?

Bankruptcy is not the kiss of death. The pressure placed upon us by our debts saps us of energy and motivation that could be better spent on our family or our passions. In fact, many famous people have filed for bankruptcy and gone on to be financially successful.

Would you be surprised to know that Donald Trump, Henry Ford and Walt Disney all filed for bankruptcy? Comic book pioneer Stan Lee filed bankruptcy as did the founders of both Hershey’s Chocolate and of of Heinz Ketchup, H.J. Heinz.

Many American politicians also make the list including our 18th president, Ulysses S. Grant, and our 25th president, William McKinley. Former Vice President Levi Morton and presidential nominee George McGovern filed. John Connally, the Texas governor wounded during the assassination of John F. Kennedy in 1963, went bankrupt as well.

As we now know, these people went on to become some of the most financially successful individuals in history. When you realize the businesspeople, entertainers, athletes, and politicians who have filed bankruptcy only to become our country’s leaders, the importance of bankruptcy protection becomes clear. It is not The End, but a new beginning.

There is a means test for individuals to qualify for Chapter 7 bankruptcy. Your income and expenses are examined to see how they compare to the standard for your state.

For example, if you earn less than the median income for a family of your size in your state, you can file for Chapter 7 bankruptcy. If you earn more, a Chapter 13 case may be your option, where you pay part of your debts over time with your disposable income.

Eligibility also includes mandatory credit counseling and budget analysis. This will address the means testing calculations for you. While there are calculators available on the internet, a bankruptcy attorney is often the best resource to help size up your situation and options.

Collection Efforts Stop Bankruptcy law forces creditors to stop all collection efforts against you as soon as your file. This mechanism is called the "automatic stay" and it's one of the main benefits of bankruptcy. Everything is put on hold, and you get much-needed breathing room.

The automatic stay also prevents creditors from filing new lawsuits against you.

Creditors can ask the bankruptcy judge to lift the automatic stay and let them move ahead with collection efforts or lawsuits. For instance, a creditor could show it needs to take immediate action because property could lose value before your case is closed.

Appointing a Trustee Once you file, a trustee is named to administer your case. Most of the action in your case happens in the trustee's office, not the courtroom. The trustee takes control of your property, unless it's exempt, and starts working through your case.

Exempt Property Is Protected Some property is protected, or exempt from your creditors' claims, and you get to keep it. When determining what is considered exempt, many states allow you to choose and use the state's definition of exempt or the list set out by federal law. Some states require you to use the state's list. Be sure to check your state's laws to find out what applies to your state.

The 2005 reform laws also limit your options to move to another state to take advantage of more generous exemptions.

Most Chapter 7 cases are "no-asset" cases, which means that you don't have nonexempt property for the trustee to sell and use to pay creditors. Your bankruptcy petition states whether your case is "asset" or "no-asset." If the trustee doesn't agree, he or she must show why the designation isn't correct.

341 Meeting - Questions on Your Debt Twenty to 40 days after filing your petition, the trustee holds a first meeting of creditors, called a "341 meeting." You must be present. You're placed under oath, and the trustee and creditors can ask questions about your property and debts. Creditors seldom ask questions.

The only responsibility you have after the 341 meeting is cooperating with the trustee and providing any requested information or documents.

Creditors have 60 days after the meeting to convince the bankruptcy court they should be paid and your debts shouldn't be "discharged."

Reaffirming Debts You can also be approached about "reaffirmation" of debts. This is an agreement between you and the creditor that you'll pay off your debt and keep the property, such as a car.

Time Limits Apply to Reaffirm Bankruptcy reforms changed the rules for reaffirming debts, too. Now you have to declare your dedication to a loan within 45 days after the 341 meeting. You can't just continue to make loan payments as they come due.

Purchase Option There is also a purchase option you can use within 45 days of the 341 meeting. For example, you could buy your car by paying the loan balance within that 45 days. This option isn't used much, because most people who file for bankruptcy don't have that kind of money.

Steps to Reaffirm a Debt If you decide to reaffirm a debt, you must file an agreement with the court. The agreement has to disclose:

Your income and expenses so the court can see that you have enough money to pay the debt

That you were advised of the amount of the debt you are reaffirming

How the debt was calculated and;

Your understanding that the debt will not be discharged

Unless you are represented by an attorney, the court must approve the agreement. If the court disapproves, there's a hearing on the issue.

If an attorney represents you, he or she must certify in writing that you were advised of the legal impact of the agreement, you were fully informed, the agreement is voluntary, and reaffirmation won't create an undue hardship on you or your family.

Discharge and Freedom from Debt Your objective in bankruptcy is discharge, or the court's order to end your liability for your debts, and your creditors' ability to seek further payment. If creditors haven't persisted in trying to get money from you and the trustee within 60 days of the 341 meeting, your debts that existed before the filing date are discharged or canceled.

There are exceptions to discharge, and your attorney can help you determine which debts you may still have to pay. Here is how common debt types may be treated in a Chapter 7 case:

What debts are discharged in Chapter 7?Usually Dischargeable

Personal loans

Credit cards

Repossession deficiencies

Auto accident claims

Judgments

Business debts

Leases

Guaranties

Negligence claims

Possibly Dischargeable

Property settlements or division of debts in divorce

Willful and malicious injuries to others

Embezzlement

Debts incurred by fraud or dishonesty

Debts arising from breach of fiduciary duty For debts not to be discharged, creditors must ask the court to decide what they want done with them. If a creditor doesn't ask for a debt to be paid back, they will be canceled.

Denial and Revocation of DischargeCreditors or the trustee can also object to discharge, or seek revocation of discharge, but it's uncommon. Grounds to deny or revoke discharge can include fraud, such as your failure to disclose property, or giving false information during your case.

Take your time when deciding whether to file - the law says you can't file again for two years. If you make the right decisions, it's a quick, efficient way to get a fresh financial start."